Wednesday, November 10, 2010

This is to be expected. All capitalist governments in the Western world are doing the same, be they center-left or center-right. They're all more or less caving in and trying to force working people to pay for the crisis caused by bankers and capitalist speculators. They are trying to balance the budget on the backs of working people, precisely those hit hardest by the recession. They are insulating the rich and powerful from having to pick up the mess they've created for humanity. The function of our "representatives" in the system is thus laid bare.

Why is this happening?

The global economy is in severe crisis. The crisis was fomented by the reckless, dogged pursuit of profit. But what exactly is a crisis? What is the problem? To identify why a capitalist economy isn't working, we need to understand what makes it run in the first place. Capitalism is about the uninterrupted accumulation of ever greater profits for the small class of persons who own the means of production in the economy. It is a system that is conditional on capitalists making lots and lots of money in profit; when that condition isn't satisfied, the system grinds to a halt.

So what's the problem right now? Isn't there just a lot of scarcity and not enough to go around?

Hardly. Quite the opposite, in fact. The problem is not one of not enough, it is one of too much. If this is paradoxical, it is because capitalism is laden with contradictions, and this is clearly one of them. There's clearly not "too much" in the sense that every single person has more than they need. There's "too much" because this is a crisis of overproduction. This means that the owners of vast amounts of capital are hoarding large surpluses because there aren't profitable places to invest it. Potentially productive wealth is sitting idle because the capitalists who own it cannot make highly profitable use of it.

Think small for a second. Think of those who invested in condominiums. Now, capitalists invested in housing not because they cared about condominiums. They weren't coordinating with each other to quench human need. No, there was a mad scramble to invest in condominiums purely because investors thought that's where the money was. With property values soaring ever higher, partly because of this mad scramble, it seemed like a great opportunity to make big profits. So what happened? Why didn't this pan out?

Right now, there simply aren't enough people with the money to buy those condos. To be sure, there are tons of people who need homes. There are even people who are being thrown out of their homes as we speak at the wishes of the big banks. Capitalism isn't responsive to human needs as such- it only recognizes cold, hard cash. And there are not enough consumers with the money to purchase the condos, so the condos sit idle and unused.

We can generalize from this example. Lots of rich investors, who have massive amounts of capital at their disposal, are not investing it right now because there are no profitable investments that can absorb all the surplus capital they're sitting on. Hence, our economy is running at about half of its capacity. In other words, hence the recession. The owners of capital are waiting until conditions of profitability re-emerge so that they can invest- until then they will just sit on what they have. And why shouldn't they? It's not as though they can't live it up in the mean time given the enormity of the surpluses at their disposal.

But, of course, the opportunity to "live it up" isn't available to all of us. It's certainly not available if you're out of work and desperate for a job to pay your bills, like millions of Americans right now.

So we have the following situation. We have massive amounts of idle capital and massive amounts of unemployed labor, sitting side by side, amidst a world that is full of human need. As David Harvey has remarked: "how stupid is that?"

The politicians who represent capital in our political system don't see it that way. Obama and the Democrats don't see anything "stupid" about this situation at all. According to the way they tell it, this is the natural way the world works. This is capitalism in all its glory. Accordingly, the Democrats, like the Republicans, have only one basic policy goal right now: we must re-establish the conditions in which capitalists can earn high profits so that the system will start functioning again.

This goal can't but be unfair to the vast majority of us. Why is it that we must bribe the rich with high profit rates in order to reduce unemployment and have a functioning society? Why is it that capital must be pleased in order for basic social institutions to have the funding they need? This is absurd. This is a one way street, an unjustifiable dependence relation.

But, again, the Democrats don't see it that way. They only see one problem: how can we restore the system to previous levels of profitability? In other words, what can we do to make rich capitalists happy again by creating the conditions in which they can earn high rates of return?

This last was the question for which the infamous $787 billion bailout was supposed to be the answer. The woefully inadequate stimulus was implemented for the same reason: to restore conditions of profitability. To be sure, the stimulus did some limited amounts of good, and I would have liked to have seen a far more ambitious spending regimen that actually faced up to the realities of the problems at hand. But it wasn't implemented with the intent of satisfying unmet human needs. It wasn't implemented for the betterment of all. It was implemented only because fiscal stimulus is one way of attempting to solve the problem of effective demand, i.e. the problem of having nobody with the money to buy all of the things that enable capitalists to turn a profit.

But, of course, throwing that kind of money around when you already have two unpaid wars going on isn't cheap. Between all of these expenditures and the massive loss of tax revenue due to sharply reduced profits, incomes, etc., the deficit has risen considerably. Enter the language of austerity and budget cuts. This is what we're being told: If the government is in the red, then something must be done. But if the basic goal is to restore high rates of profit for the capitalist class, then clearly we can't solve the deficit problem by taxing the rich. Where, then, will the money come from?

It will come from forcing punishing cuts down the throats of ordinary people. It will come from slashing and burning schools, public transit, public health care, and other programs. As I've pointed out elsewhere, this austerity is making profits possible right now.

But this isn't the message we will hear from Obama, the Democrats and the Republicans. They won't sell it this way, they're smarter than that. We'll hear nothing but budget-cut fatalism from them. But that is to be expected. They are the enemy of the vast majority of people in this country- they stand for the interests of the few, not the aspirations of the many. They'll try to say that "spending is out of control" in Washington, but we know better.

The way to resist this process can't be to go in for the Democrats. The Democrats are the agents pushing through the cuts. They are precisely the ones insulating the system from real change.

And make no mistake, the system is what needs changing. What's the point of going all-in for the reformist Keynesian fix, if it leaves the culprits who dragged the whole system down in power? Why continue to allow the commanding heights of our economy to be in the hands of an unelected, unaccountable elite who care nothing for us and everything for their private gain. Why tolerate a system in which the minority profit at the expense of the majority?

Many aren't tolerating such a state of affairs. The inspiring mass resistance in France, Greece and also, now, the UK is the model that progressives must look to. We won't get more by asking for less. We've got to ask for it all- and we've got to be convinced of the power we all have when we act together in concert.

6 comments:

Richard Estes But capitalists fail to recognize that violence is a form of labor, a particular means of production. And, by pursuing this path, they run the risk of increasing the possibility that labor will manifest itself increasingly through violence, as opposed to structures created by capital. Beyond this, there is the fact that capital depends upon labor being compensated at certain levels, in relationship to productivity, to grow. If the current supply side, neoliberal approach is based upon the notion that capital can be liberated from these constraints, it is not romantically utopian, it is suicidal. As the renumeration of labor is pushed towards zero, so is the extent and scope of capital. Even the planters who ran large sugar plantations with the work performed by slaves had to have somewhere to sell their sugar, somewhere where wage laborers, able to earn money beyond what was possible during feudalism and antiquity, could purchase it.

Or, to put it differently, if Britain, France and their Caribbean colonies were all organized along the lines of the plantation model . . . well, just to suggest it exposes its impossibility. The capital necessary to create them never would have come into existence, it would have never been aggregated in the enormous amounts required to create such capital intensive enterprises. In this respect, the plantations had a parasitic relation to the cotton mills and textile plants which did have the potential to serve as the motor for the creation of a wage labor, capitalist society, and fulfilled it.

So, to move in such a direction, a society where labor is compensated less and less, so that capital can be accumulated in larger and larger amounts, is as plausible as the underlying assumption of the Deficit Reduction Commission that the deficit can be cut predominately by relying upon reducing government expenditures and employment. In fact, the opposite is true. In the first instance, capital is inexorably shrunk as already noted. In the second, the deficit skyrockets. And this brings me back to my first point, a society that allows capital to overwhelmingly expropriate the productivity of labor for itself will discover that labor diverts its productivity more and more into violent resistance.

Thanks for this- this is interesting. I don't think I follow all of what's said there, but I definitely agree with the drift of the comment about the growing instability of capitalism.

But I don't think that capitalism will mechanistically produce resistance. That is, I don't think that growing unemployment and inequality, say, will necessarily produce anti-capitalist revolt.

I'm with David Harvey here. I think that capitalism is economically and socially (not to speak of humanly, environmentally) unsustainable. But I don't think it will extinguish itself- it will have to be pushed.

To be sure, some spontaneous resistance will be produced. Some mixed radicalization will occur- but unless we actively push the struggle forward it won't succeed. There has to be a combination of objective conditions and subjective initiatives- certain circumstances combined with active human effort.

Marx says that human beings make their own history, but not in conditions of their own choosing, etc. He says things like that all over the place: "we make our own history, BUT...". I think the point of leftist politics is to strive towards removing that "but". That is, we intervene to change the conditions in such a way that people can take control of their own lives- so that the way that our lives are structured is something over which we have democratic control.

t: of course, I agree with Harvey, a potential for an upsurge in labor violence is not necessarily analoguous to an increased likelihood of revolutionary action

it could, of course, play out in a very regressive way (consider, for example, the 1863 riots in NYC during the Civil War)

beyond this, my initial post is based upon the interweaving of two concepts: (1) to the extent that labor is made more insecure, capital is likewise made more insecure; and (2) the expansion of capital is dependent upon the explansion of the markets for the goods generated by capital investment

in regard to the first, pushing workers into conditions that are more and more informalized means that a variety of social control measures are lost as well, necessitating a reliance upon surveillance and armed security

as for the second, I don't think that there is much need for additional elaboration

I agree with everything you say, except I'm not sure if I entirely endorse your claim that "in regard to the first, pushing workers into conditions that are more and more informalized means that a variety of social control measures are lost as well, necessitating a reliance upon surveillance and armed security".

In particular, it's the premise about more and more informalized labor conditions that I'm not sure about. In the US, it is true that capital is intent on smashing any and all labor organizations (the most recent and visible example is the assault on teachers' unions). Moreover, it is true that capital will become more insecure as it further sinks the economy by laying off more workers.

But I don't see that the status of labor is becoming less formalized. There is, of course, the question of undocumented immigrants, whose informal non-citizen legal status makes them more amenable to exploitation by capital. But in general, it is not as though the majority of workers in the US are being exploited in this way. Their exploitation is being increased in various other ways, but I don't see that capital has a way of growing the ranks of the less formalized labor markets without moving offshore.

Also- capital's war on labor is often achieved through formal/legal sanctions. Capital has a large array of legal tools at its disposal with which to more efficient exploit labor (right-to-work laws, etc. etc.). I would wager that capital would fight these formal measures being dissolved into informal ones insofar as informal situations seem to leave open more space for struggle. Of course, if for some reason the laws were to change in favor of labor- capital would probably fight for either a return to informal arrangements, or for anti-labor legal arrangements.